Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation

FOR IMMEDIATE RELEASEFDIC-PR-20-2004

March 11, 2004

Interagency Guidance Issued on Unfair or Deceptive Acts or Practices
by State-Chartered Banks

The Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation today issued guidance outlining standards they will apply to determine when acts or practices by state-chartered banks are unfair or deceptive. Such practices are illegal under section five of the Federal Trade Commission (FTC) Act.

In order to respond to questions raised by institutions under the agencies' supervision, the statement also provides guidance on steps that state-chartered banks can take to avoid engaging in unfair or deceptive acts or practices. The approach outlined in the statement is based on long-established standards used by the FTC to enforce section five of the FTC Act against non-bank entities.

In 2002, the Board and the FDIC affirmed their authority to apply the prohibition against unfair or deceptive acts or practices to the activities of state-chartered banks. At that time, the agencies also announced their intention to issue further guidance for state-chartered banks with respect to the prohibition.

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 9,237 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars - insured financial institutions fund its operations.

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